ETFs
BlackRock Launches Equity ETF With 100% Downside Coverage
By Manya Saini
July 1 – BlackRock has launched a “buffer” exchange-traded fund that aims to provide 100% downside protection to conservative investors looking to tap equity markets, the world’s largest asset manager said Monday.
So-called buffer or risk-managed ETFs help maximize an asset’s return for investors and simultaneously provide downside protection over a given period.
The new product will likely appeal to investors who are hoping to ride a rally in stock markets as they continue to trade near record highs, but are concerned that a slowing economy and higher interest rates for longer could hurt sentiment going forward.
Buffer ETFs also typically experience lower redemption requests during times of high market volatility.
“BlackRock is not ahead of the game – and is even a bit behind – in the buffered ETF market, but with its size, reach and marketing machine, it has a good chance of catching up and outperforming early entrants,” said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.
“Launching buffered ETFs now, when the market is near all-time highs and many investors are nervous — especially about inflation, upcoming elections and debt expansion — could be particularly fortuitous for them,” he added.
The iShares Large Cap Max Buffer Jun ETF began trading on Monday under the ticker symbol “MAXJ.”
The asset manager said the ETF will track the returns of the benchmark S&P 500 index using options with an upside cap, while providing 100% downside protection for about a year.
“With record levels of cash on hold, many investors are looking for tools to help them manage market volatility before returning to the market,” said Rachel Aguirre, head of U.S. iShares product at BlackRock.
BlackRock added that it now has $25 billion in assets under management across more than 40 active ETFs in the United States, as of June 30.
This article was generated from an automated news agency feed without modification of the text.
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